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Last Updated : Feb 12, 2020 12:06 PM IST | Source: Moneycontrol.com

D-St rallies 1% as fears of China virus recede; 5 factors driving the rally

Sectorally, the action was seen in FMCG, IT, Banks, telecom, auto, and metals stocks while profit booking was seen in realty, power, capital goods, and public sector.


Indian market rallied more than 1 percent on Wednesday tracking gains in other Asian markets. The S&P BSE Sensex rallied by over 400 points while Nifty50 reclaimed crucial resistance placed at 12,200 levels.

Sectorally, the action was seen in FMCG, IT, Banks, telecom, auto, and metals stocks while profit booking was seen in realty, power, capital goods, and public sector.

At 11:00 AM, the S&P BSE Sensex was up 350 points to 41,574 while the Nifty50 gained 97 points to 12,204.

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We have collated a list of top five factors which could be driving rally on D-Street:

Positive Global Cues:

D-Street look set to register the second consecutive day of gains largely led by positive trend seen in other Asian markets.

According to a Reuters report, Chinese shares fell 0.12 percent, but investors in other equity markets looked past this decline. Shares in Hong Kong rose 0.57 percent to a three-week high. Australian shares were up 0.52 percent, while Japan's Nikkei stock index rose 0.6 percent.

Fears of Coronavirus recedes:

The global mood brightened after China’s senior medical adviser said on Tuesday the number of new coronavirus cases was falling in some provinces and forecast the epidemic would peak this month.

The number of new cases in Hubei, the province at the epicenter of the outbreak, was 1,068 as of Tuesday, down from a peak of over 3,000 new cases on Feb. 4, and the lowest number of new infections since Jan. 31, said a Reuters report.

“There have been some encouraging signs with respect to the spread of Coronavirus as news reports suggested that the epidemic could plateau in the next few weeks. However, it continues to remain one of the key monitorable for global markets including India,” Ajit Mishra, VP - Research, Religare Broking Ltd told Moneycontrol.

Stable crude oil:

Oil futures, which have been in a downtrend since the start of the year, rose in Asia from 13-month lows but is still trading around $55/bbl.

Oil prices climbed on Wednesday as China reported its lowest daily number of new coronavirus cases since late January. Brent crude was up over 1 percent, at $54.99 per barrel.

According to a Reuters report, travel restrictions to and from China and quarantines have cut fuel usage. The two biggest Chinese refiners have said they will reduce their processing by about 940,000 barrels per day (bpd) as a result of the consumption drop, or about 7 percent of their 2019 processing runs.

Trump visit to India:

U.S. President Donald Trump said on Tuesday he would sign a trade deal with Indian Prime Minister Narendra Modi if it was the right one, said a Reuters report.

Trump is scheduled to make his first visit as president to the world’s largest democracy later this month.

Technical Factors:

The Nifty50 reclaimed its 50-Days Moving Average placed at 12,120, and also Tuesday’s intraday high of 12,172 on Wednesday which suggests strength in the rally.

For bulls to regain control, the Nifty50 has to close above the 12,200 levels on Wednesday. There is immediate support at 12,050-12,000 which is likely to provide support on the lower side, suggest experts.

“The index shifted its support to 12050-12000 zone holding above said levels can see some more gains towards immediate hurdle of 12160-12200 zone, traders can use buy on dip strategy with keeping overall stop out level below 12000 zone,” Rohit Singre, Senior Technical Analyst at LKP Securities told Moneycontrol.

“Nifty bank closed day at 31300 zone with gains of 242 points, support for the Nifty bank is coming near 31100-30900 zone and resistance is coming near 31500-31700 zone,” he said.

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First Published on Feb 12, 2020 11:52 am
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